1. Entries for Issuing and Calling A form of an interest-bearing note used by corporations to borrow on a long-term basis.Bonds; Loss

   Hoover Corp., a wholesaler of music equipment, issued $8,440,000 of 25-year, 8% callable bonds on March 1, 20Y2, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year.

   20Y2
   Mar. 1	Issued the bonds for cash at their face amount.
   Sept. 1	Paid the interest on the bonds.
   20Y4
   Sept. 1	Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.)

   If an amount box does not require an entry, leave it blank.

   Journalize the entries to record the above selected transactions.

   Issued the bonds for cash at their face amount.

   20Y2 Mar. 1	Cash Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Loss on Redemption of Bonds	fill in the blank 9a6d8c04f07bf8f_2	fill in the blank 9a6d8c04f07bf8f_3
   	Bonds Payable Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Loss on Redemption of Bonds	fill in the blank 9a6d8c04f07bf8f_5	fill in the blank 9a6d8c04f07bf8f_6

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   Bonds payable is always recorded at face value.

   Paid the interest on the bonds.

   20Y2 Sept. 1	Interest Expense Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Loss on Redemption of Bonds	fill in the blank 5a7445f4e027fa7_2	fill in the blank 5a7445f4e027fa7_3
   	Cash Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Loss on Redemption of Bonds	fill in the blank 5a7445f4e027fa7_5	fill in the blank 5a7445f4e027fa7_6

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   The semiannual cash payment to bondholders is the interest expense when bonds are sold at face value.

   Called the bond issue at 102, the rate provided in the The contract between a corporation issuing bonds and the bondholders.bond indenture. (Omit entry for payment of interest.)

   20Y4 Sept. 1	Bonds Payable Accounts Payable Bonds Payable Cash Discount on Bonds Payable Gain on Redemption of Bonds Interest Expense	fill in the blank d69eaf021f87f9c_2	fill in the blank d69eaf021f87f9c_3
   	Loss on Redemption of Bonds Accounts Payable Cash Discount on Bonds Payable Gain on Redemption of Bonds Interest Expense Loss on Redemption of Bonds	fill in the blank d69eaf021f87f9c_5	fill in the blank d69eaf021f87f9c_6
   	Cash Accounts Payable Cash Discount on Bonds Payable Gain on Redemption of Bonds Interest Expense Loss on Redemption of Bonds	fill in the blank d69eaf021f87f9c_8	fill in the blank d69eaf021f87f9c_9

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   The gain or loss is the balancing amount needed to complete the entry and is the difference between the carrying amount of the bonds and the redemption price.

   A corporation usually redeems its bonds at a price different from that of the carrying amount of the bonds.